Japan PM Abe: Sales tax hike hurts consumers' purchasing power

TOKYO (Reuters) – Japanese Prime Minister Shinzo Abe said on Thursday he will scrutinise how an increase in the sales tax affects the country’s prospects for ending deflation as a higher levy hurts consumers’ purchasing power.

“The key is whether Japan’s economy can return to a growth path in the July-September quarter,” Abe told parliament.

“I’d like to make the decision with a cool mind, to ensure that our ‘Abenomics’ policies are a complete success,” he said.

Japan’s economy suffered a severe contraction in the second quarter as a sales tax hike in April hurt household spending. Abe has said he will decide by the end of this year whether to proceed with a scheduled second increase in the sales tax rate, to 10 percent next October.

(Reporting by Leika Kihara and Tetsushi Kajimoto; Editing by Chris Gallagher)

Japan PM Abe: Sales tax hike hurts consumers' purchasing power